19 August 2026
Introduction
The doctrine of exhaustion has become a central principle in Kenya’s tax dispute resolution framework. The doctrine requires a litigant to first utilize all available statutory and administrative dispute resolution mechanisms before approaching the courts. In tax matters, this principle seeks to ensure that specialized bodies such as the Commissioner of Domestic Taxes and the Tax Appeals Tribunal (TAT) are accorded the first opportunity to determine disputes falling within their jurisdiction.
The significance of this doctrine was reaffirmed by the High Court in Mubea Group Limited v Kenya Revenue Authority (2025), where the Court emphasized that taxpayers must exhaust the remedies provided under the Tax Procedures Act and the Tax Appeals Tribunal Act before invoking the judicial review jurisdiction of the High Court. The decision reinforces a growing body of jurisprudence that places the Tax Appeals Tribunal at the centre of tax dispute resolution in Kenya.
Statutory Foundation of the Doctrine
The doctrine of exhaustion is anchored in Article 159(2)(c) of the Constitution of Kenya, 2010, which encourages alternative forms of dispute resolution. It is further codified under section 9(2) of the Fair Administrative Action Act (FAAA), which provides that a court shall not review an administrative action unless the mechanisms for appeal or review available under any written law have first been exhausted.
In tax disputes, the primary statutory framework consists of the Tax Procedures Act, 2015 (TPA) and the Tax Appeals Tribunal Act, 2013 (TATA). Section 51 of the TPA allows a taxpayer dissatisfied with a tax decision to lodge an objection before the Commissioner. If dissatisfied with the objection decision, section 52 of the TPA grants the taxpayer the right to appeal to the Tax Appeals Tribunal. Appeals from the Tribunal lie to the High Court on matters of law and subsequently to the Court of Appeal.
The legislative intention is therefore clear: tax disputes should follow a structured hierarchy beginning with the Commissioner, proceeding to the Tribunal, and only thereafter reaching the superior courts.
Judicial Development of the Doctrine
The foundation of the doctrine in Kenyan jurisprudence can be traced to Speaker of the National Assembly v James Njenga Karume [1992] eKLR, where the Court of Appeal held that where a statute provides a clear procedure for redress, that procedure must be strictly followed before resorting to the courts. This principle has since become a cornerstone of administrative law and tax litigation.
The Court of Appeal further elaborated the rationale of the doctrine in Geoffrey Muthinja Kabiru & 2 Others v Samuel Munga Henry & 1756 Others [2015] eKLR. The Court observed that courts should be forums of last resort and that parties should first utilize the dispute resolution mechanisms specifically established by law. The decision emphasized that exhaustion promotes efficiency, expertise, and orderly administration of justice.
Similarly, in Mutanga Tea & Coffee Company Ltd v Shikara Limited & Another [2015] eKLR, the Court of Appeal stressed that statutory mechanisms should not be bypassed merely because a party believes the courts may offer a more favourable remedy.
The Decision in Mubea Group Limited v KRA (2025)
In Mubea Group Limited v Kenya Revenue Authority (2025), KRA issued an agency notice to the taxpayer’s bank demanding payment of alleged tax liabilities amounting to approximately KShs. 10 million. Mubea contended that the liability arose from system migration errors during KRA’s transition from the Integrated Tax Management System (ITMS) to iTax and that there had been no valid assessment or tax decision upon which the demand could be founded. Consequently, the company approached the High Court through judicial review proceedings seeking to challenge the agency notice.
KRA raised a preliminary objection arguing that the dispute fell within the jurisdiction of the Tax Appeals Tribunal and that the proceedings offended the doctrine of exhaustion. The Authority relied on section 52 of the Tax Procedures Act and section 9 of the Fair Administrative Action Act.
The High Court upheld the preliminary objection and struck out the proceedings. The Court held that an agency notice issued under section 42 of the Tax Procedures Act constitutes an appealable tax decision capable of being challenged through the statutory dispute resolution process. Since an alternative remedy existed before the Tax Appeals Tribunal, the taxpayer was obligated to exhaust that mechanism before approaching the High Court.
The Court further found that the taxpayer had failed to demonstrate exceptional circumstances that would justify exemption from the exhaustion requirement under section 9(4) of the Fair Administrative Action Act.
Whether an Agency Notice is an Appealable Decision
A key issue in Mubea was whether an agency notice amounts to an appealable tax decision. The Court relied on earlier authorities, particularly Krystalline Salt Limited v Kenya Revenue Authority [2019] eKLR, where it was held that an agency notice issued under section 42 of the Tax Procedures Act is capable of challenge before the Tax Appeals Tribunal.
The significance of this finding is that taxpayers cannot circumvent the Tribunal by characterizing enforcement actions as purely administrative measures. Once the action falls within the statutory definition of a tax decision, the dispute must first pass through the established tax dispute resolution framework.
Exceptional Circumstances and the Exhaustion Requirement
Although the doctrine is mandatory, Kenyan courts have recognized exceptions. Section 9(4) of the Fair Administrative Action Act empowers courts to exempt a party from exhausting alternative remedies where exceptional circumstances exist and where exemption is in the interests of justice.
In Republic v Kenya Revenue Authority & Another; Ex Parte Nairobi City County Government [2019] eKLR, the Court held that the mere existence of an alternative remedy does not automatically bar judicial review. However, a party seeking exemption must demonstrate exceptional circumstances.
Similarly, in Republic v National Environment Management Authority Ex Parte Sound Equipment Ltd [2011] eKLR, the Court acknowledged that judicial review remains available where statutory mechanisms are inadequate, ineffective, or incapable of addressing the complaint.
Nevertheless, courts have consistently interpreted the exception narrowly. In Mubea, the High Court found that the taxpayer had not shown any exceptional circumstances because the Tax Appeals Tribunal was fully capable of addressing the legality and validity of the agency notice.
Importance of the Doctrine in Tax Administration
The doctrine of exhaustion serves several important objectives within Kenya’s tax administration system. First, it promotes the use of specialized expertise. Tax disputes often involve complex questions of accounting, valuation, customs procedures, and statutory interpretation. The Tax Appeals Tribunal possesses the technical competence necessary to handle such disputes effectively.
Second, the doctrine enhances efficiency by reducing the burden on the courts. If every tax disagreement were filed directly in the High Court, the judicial system would become overwhelmed and tax administration would suffer.
Third, exhaustion promotes consistency in tax jurisprudence. The Tribunal develops expertise and establishes coherent principles that contribute to predictability in tax law.
Finally, the doctrine respects legislative intent. Parliament deliberately established a comprehensive dispute resolution mechanism under the Tax Procedures Act and the Tax Appeals Tribunal Act. Permitting litigants to bypass these mechanisms would undermine that statutory framework.
Conclusion
The decision in Mubea Group Limited v Kenya Revenue Authority (2025) represents another significant affirmation of the doctrine of exhaustion within Kenya’s tax dispute resolution regime. The High Court reiterated that taxpayers must first pursue the remedies provided under the Tax Procedures Act and the Tax Appeals Tribunal Act before seeking judicial intervention. The Court further clarified that agency notices constitute appealable tax decisions and that judicial review will only be available in exceptional circumstances.
Together with decisions such as Speaker of the National Assembly v James Njenga Karume, Geoffrey Muthinja Kabiru, Mutanga Tea & Coffee Company Ltd, Krystalline Salt Ltd, and Ex Parte Nairobi City County Government, the Mubea case strengthens the principle that courts are forums of last resort in tax disputes. The decision therefore contributes to the development of a coherent, efficient, and specialized system of tax dispute resolution in Kenya while preserving the supervisory role of the High Court for truly exceptional cases.